Liberty Interactive Corp, Liberty Media Corp and Liberty Broadband Corp at Morgan Stanley European Technology, Media & Telecom Conference
Nov 16, 2016 AM EST
FWONA - Liberty Media Corp
Liberty Interactive Corp, Liberty Media Corp and Liberty Broadband Corp at Morgan Stanley European Technology, Media & Telecom Conference
Nov 16, 2016 / 01:50PM GMT
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Corporate Participants
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* Greg Maffei
Liberty Media Corporation - CEO
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Conference Call Participants
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* Ben Swinburne
Morgan Stanley - Analyst
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Presentation
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Ben Swinburne, Morgan Stanley - Analyst [1]
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Okay, let me get started. Good afternoon. My name is Ben Swinburne, Morgan Stanley's US media analyst. Please note that important disclosures, including my personal holdings disclosures and Morgan Stanley disclosures all appear in the handout available in the registration area and on the Morgan Stanley public website.
We're really excited to welcome, I believe for the first time, Greg Maffei to my left. Greg is the Chief Executive Officer of Liberty Media Corporation. He is also President and CEO of both Liberty Broadband and TripAdvisor, which were both spun off from Liberty Media or each spun off from Liberty Media and Liberty Interactive respectively a few years ago. Liberty Media owns interest in a broad range of media, communications and entertainment businesses. Those interests are attributed to three more -- there will be a test at the end -- three more tracking stock groups: the Liberty Braves Group; the Liberty Media Group, soon to be renamed the Formula One Group; and the Liberty SiriusXM Group.
Greg, thanks for being here.
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Greg Maffei, Liberty Media Corporation - CEO [2]
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Thank you for having me. What can be nicer than Barcelona? Nicer than New York this time of year.
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Ben Swinburne, Morgan Stanley - Analyst [3]
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The timing here is great, given that you guys had a long and in-depth investor day last week so we can dive into a lot of topics. I want to start with the music business. You spent some time on -- more time than I would have guessed last week and we had Vivendi speaking earlier I think on this stage with a very bullish outlook on music. You and Liberty have two major investments in that space, Liberty Sirius, where you have a 55%-ish interest in SiriusXM and your investment in LiveNation. Maybe talk about the outlook for the music business from where you sit, where you see opportunity and why you think those two businesses in particular are well-positioned.
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Greg Maffei, Liberty Media Corporation - CEO [4]
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So obviously the appeal of music -- and to be nice to our (inaudible) Vivendi -- is universal. There is an enormous, obviously, worldwide demand and much of that is increasing and much of it is going more global. A couple of impacts of that. Big acts are increasingly making their money out of touring and LiveNation is the largest concert promoter and ticketer through its arm Ticketmaster and that part of the income of your average artist is growing and the ability to conduct a global tour, to have a US artist might've had done -- the United States done 40 tours in the United States and done five in Western Europe. Now we're doing Asia and South America and increasingly broad global and that plays very well (inaudible) LiveNation and its ability to be the broadest, largest ticketer or broadest, largest promoter around the world. Other trends out there obviously are that much of what has happened over the last few years with piracy and effectively the commoditization. You have piracy, then you had Apple really break the album. All that has contributed to the decline of recorded music but new forms of playing music -- streaming -- have grown dramatically over the last few years. That is not a tremendous business in our judgment but we have one business, SiriusXM in the United States, which is fairly unique to the United States, satellite radio, that primarily was in the car and what I would call the top of the spear, the most effective form of monetization as a very effective form of being preinstalled in the car that give it a big moat compared to the normal streaming services. And in addition, we have substantial amounts of incremental content, whether it be Howard Stern, who is very popular in the US, or whether it be ESPN or CNBC or other audio content, not just music. One of the challenges is that music is somewhat of a commodity. There are many, many, many streaming services that are largely undifferentiated. So one of the goals is to find something that puts your service and makes it different than just the modify or the Apple service or the other longtailed services out there. I think both LiveNation and SiriusXM are very well-positioned to benefit from growth of global music but both in ways that are relatively protected and attractive business models compared to much of the competition.
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Ben Swinburne, Morgan Stanley - Analyst [5]
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Sirius has been proving the doubters wrong for a long time. Jim has done a great job running that company. But there's this sort of streaming (inaudible) competition in the dashboard that's been out there forever. Do you think the 360L platform that they are investing in, which brings two-way communication -- is it a game changer? Is that overstating it? What do you think it means to addressing that long-term concern investors have in the Company?
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Greg Maffei, Liberty Media Corporation - CEO [6]
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So I think --
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Ben Swinburne, Morgan Stanley - Analyst [7]
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Maybe talk a little bit about --
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Greg Maffei, Liberty Media Corporation - CEO [8]
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Yes. Investors are -- if you looked at the performance of SiriusXM and its continued ability to grow subscribers, roughly 2 million, 2.1 million last year on its way to probably high 1.67 million, 1.89 million this year. We'll see. You look and say that's a great business that is executing incredibly well, as Ben has suggested. The challenge is what's the terminal value in a world where there is going to be much music that is streamed nearly for free, increasingly cheaper and cheaper. Spotify is a pretty good service. While that's around, that's a real challenge and my personal view is that Apple and Google and Amazon and people who have other strategic reasons to be in the music business will continue to drive the subscription revenue prices down and that the revenue achieved will come down. How do we, in a world where people only want to pay $5 to stream media and on demand, be able to achieve the $12 or $14 that we get today and expect to get over time? Part of that is ease-of-use -- as I mentioned, being in the car and simple. Though as Ben mentioned, that advantage is going to go down over time as they continue to bring their device into the car. Another thing is differentiated content and I mentioned some of the ways we're differentiated. The third way is the technology that we're bringing in that takes really advantage of the best of both, of having a streamed platform or rather a broadcast platform with big bandwidth in satellite as well as being able to with a connected car, as increasingly cars will be connected, to draw on library, to draw on related content that's useful. So you could be watching Howard Stern interview Madonna and we would be up in the 360 dash, 360 dashboard we'll pull up when was Madonna last on Howard Stern? You can click on that. Here are the five most popular Madonna songs. You can click on that. So assembling all the content in a more easy fashion for you to achieve whatever your needs are around either Howard Stern or Madonna.
Similarly for us, running the business, having a connected view or having the platform that we have, there are many things we're going to be offering for the car manufacturers and other services as a platform on top of that and our relationship to the OEMs is very good and we currently have building that in with Toyota, basically all of the Japanese manufacturers, Chrysler. The only ones we really don't have of scale are Ford and General Motors, who just had to go on their own way. There's nobody else to scale as an independent provider who is doing what we've done and I think that's well-positioned.
The last point of that is it's very helpful for us to manage our relationship with you as a consumer. If you want to upgrade, if the service expires we now will have the ability to on your dashboard renew or upgrade your service and our ability to not have to reach out to you on the phone and say, you're going to -- your service is expiring but instead remind you, tell you've got three weeks, you've got one week, you've got one day. It expired. You want to renew now. Push the button. I think there's a lot that we can do to match our relationship with the customer probably because of 360L as well.
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Ben Swinburne, Morgan Stanley - Analyst [9]
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The timeline for that will be sort of next few years. Is that --?
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Greg Maffei, Liberty Media Corporation - CEO [10]
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Yes, it's going to be rolled out in the 2017 model year for some of these guys but car cycles are incredibly long. It's an enormous challenge when you work with them in one sense that you have a great new product; getting it installed takes long time. We're talking about 20, 21 cars per year for some of our manufacturers. On the other hand, once you're installed it's an enormous strength. Obviously the difficulty of getting you uninstalled is also very high and we know we're going to be in 75% of all the cars in the United States for the next 8 to 10 years. It's just inevitable; we're locked in.
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Ben Swinburne, Morgan Stanley - Analyst [11]
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Let's talk a little bit about the financial side of the equation. Sirius stock has been kind of flattish for a few years as they've grown EBITDA healthily. So the multiples come in, we've been recommending investors buy through Liberty Sirius where you get it at a discount. You acknowledged last week that discount is frustrating and has persisted longer than you would have guessed. You also talked about addressing it at some point. Maybe you could talk about the dividend announcement (inaudible), how that may or may not impact the discount and your ability as a major shareholder to take advantage of that, given [in payment] Liberty typically doesn't support dividends, and that was unusual in and of itself. And then any other broad things we should be thinking about or looking for as you look at trying to collapse that discount?
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Greg Maffei, Liberty Media Corporation - CEO [12]
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So as Ben mentioned, we have a stock that's called Liberty SiriusXM that the only thing in there is Sirius and 65% interest in Sirius. There is also a public stub that trades that's about a 35% interest in Sirius. Currently, the public stub is trading at a -- somewhere around a 15% premium or we're at a 15% discount, more accurately. Why does that happen? They are buying back an enormous amount of stock on a $7 billion equity value and we're not buying any stock back on a $13.5 billion equity value. Supply and demand, I suspect, drives that. There also was speculation that we at some point will offer to purchase the balance of the stubs, the public stubs, and pay a premium and maybe pay in our own stock and so we'll be chasing our own tail, using a discounted stock to chase a more premium stock and having to pay a higher premium.
Let me first try and shoot the (technical difficulty) idea in the head. Liberty tends to be pretty sharp penciled and we're unlikely to chase this and we have owned the stock from owning a 40% position at one point to working our way up to a 65% position without paying any premium. When we struck the deal to buy the 40% we effectively paid the premium and had no ability for the Company to prevent us from going over 51%. We [had a control] premium already embedded in. We're not going to pay a big premium. So take that off the table.
Secondly, as Ben suggested, there is a dividend fee paid. We'll be the beneficiaries of 65% of dividends so if they pay $200 million a year, $135 million or something goes to us. I think that's what's going to go on over time with more cash to us, we can shrink the discount perhaps. What we really care about, in a way I don't care about the discount in the interim. What I care about is the discount (inaudible) collapse the two stocks and it goes away and driving up currency at that moment.
So you should, I think, walk away with two ideas. One is that we're not going to overpay; there's just no reason and that's not in our history. I hope Ben can confirm that. Two, that we're judiciously going to attack that premium over time or that discount over time and they're likely to close at some point so I don't know why if you were interested in Sirius you wouldn't want to invest in SiriusXM. It is a bigger, more liquid stock and I hope we have been good stewards of your capital in the past and will be going forward.
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Ben Swinburne, Morgan Stanley - Analyst [13]
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Keeping on the theme of stewards of capital, you announced a major acquisition, one of the larger ones I can remember for Liberty, which is Formula 1. Two-stage deal. But let me just hit a high level Greg. Why is this an attractive asset and one you've -- it's an $8 billion bet for you guys with a lot of leverage. So tell us why the market should be excited about this and why you're excited about it.
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Greg Maffei, Liberty Media Corporation - CEO [14]
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Well, let me first say the market has already gotten excited about that so I'm happy with --
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Ben Swinburne, Morgan Stanley - Analyst [15]
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More excited about it.
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Greg Maffei, Liberty Media Corporation - CEO [16]
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Well, even yet more excited. One of -- we agreed to about an $8 billion valuation back on September 6 and the structure of it was is we bought some of the shares of the selling shareholder group led by CVC and we agreed to give them stock in a Liberty Media Group tracking stock, which had some other assets in there that were frankly dwarfed by what we were buying, on the basis that Liberty would be able to improve the performance and particularly with our management team led by Chase Carey. So far that's worked pretty well. The stock has traded up nicely from about $21 and change to $30-ish -- I don't know what it is today. One of Ben's competitors recently put out a buy recommendation for $55, so considering we bought it for $21 in September, we feel pretty good about that. The appeal, in our minds, is first it's very hard to buy a global sport. You can't by the Olympics, you can't buy FIFA. Well, people try to buy FIFA one way or another.
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Ben Swinburne, Morgan Stanley - Analyst [17]
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You shouldn't buy FIFA.
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Greg Maffei, Liberty Media Corporation - CEO [18]
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It's not supposed to be bought. Anyway, Formula 1, we own the sport and it truly is a global sport, 400 million viewers around the world, 1.6 billion cumulative audience, 400 million uniques. Despite that, we think it's really in some ways been undermanaged. Bernie Ecclestone deserves massive credit for having built support up but I would think there's another leg out here. The three big areas we make money today are first, payments for venues. We have about 21 races a year. I think there's some modest upside in that, in increasing number of races, but in addition, as you move from a world of all over the air free to some pay -- for example, when we did that in the UK when we moved to BSkyB, there was a large uptick in our broadcast revenue. I think there's more opportunity there around more races but even more importantly moving on the broadcast side from free-to-air to pay. But it's a part of that [side on the] looking at broadcast revenues. Today we collect virtually no revenue from digital and it strikes us that's a mistake or an opportunity that's been missed. You can imagine [over-the-top] service and we certainly have work to do with the broadcast partners to build that over-the-top service where they have [billings] in some cases. But they're not going to pursue those rights on their own. You need some kind of sharing arrangement; we provide opportunity for them, we believe.
Two, if you ever thought about a product that could take advantage of augmented reality or virtual reality, it seems like driving a Formula 1 car is a great example and we have none of that. Gaming, I was on the board of Electronic Arts for 10 years. Racing is a huge category we haven't really haven't participated in in a big way. Back to the point about the over-the-top video -- we have an enormous rich amount of video and data that we're not really using, whether that be data from the teams or data inside the car that we don't really expose to the audience and I think that can both spice up the broadcast side but really create something unique around the digital side.
Lastly, there are elements of that data that may be useful for them like ancillary things like gaming that we haven't pursued. Above all, I think [within the lap] is a sponsorship which is the big category of revenue. We have one person who works full-time in sponsorship today, two people who work part-time and we have (inaudible) sponsors. In contrast, major league baseball [that's operated fully in the] United States -- there are some international games but not at scale -- has 75 sponsors or 80 people working in sponsorship. We think it's an underinvested area and we own a US baseball team so have some sense of that.
So those are -- aware of the opportunities. I think more broadly, the sport is incredibly exciting on one level and also missing some opportunities on another. It's been a Mercedes duel all year; it would be nice to see Ferrari, Red Bull, Williams, McLaren and others in the race. So that will level the playing field in some ways perhaps and create more opportunities around excitement, create more opportunities about bringing younger people into the sport. Chase Carey, as I mentioned, is the new Chairman, Executive Chairman, obviously long experience for those who know, both in sport and in broadcast and the intersection of the two, hard-pressed to think of a guy who would be better positioned to run the business. So that's some of the reasons we're enthusiastic on the business side. The structure of the business in terms of very high free cash flow, recurring nature, enormous amount of it's contracted out. We have a sharing relationship with the team which buffers us if there's downside. We have incredibly high free cash flow conversions, low tax rate, low CapEx. All these are some of the structural reasons around the business model. We like it. I think first and foremost is the global appeal of the sport and the opportunity to grow it that we find exciting.
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Ben Swinburne, Morgan Stanley - Analyst [19]
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For everyone's benefit, that's LMCK is the tracker today but that will be changing at the end of the second (multiple speakers).
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Greg Maffei, Liberty Media Corporation - CEO [20]
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Yes, Q1 we -- hopefully January/February we expect to close and we will change the ticker from LMCK to FWON. (multiple speakers).
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Ben Swinburne, Morgan Stanley - Analyst [21]
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I want to go over some of the points you made on the business, Greg. So just going back to the deal financing, you have a margin loan that closed, I believe, last week. But you also talked about raising capital from some third-party investors including the teams. Can you talk about the process and (multiple speakers)?
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Greg Maffei, Liberty Media Corporation - CEO [22]
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Yes. For those who (inaudible) Chris Phillips, who writes about it, knows nothing, just to be clear. Chris, if you're listening, you're clueless. The structure is completely misunderstood. We are issuing stock to Formula 1, the new entity, to CVC. CVC is starting to monetize some of that stock and looking to do a placement of their shares and that will be the teams or potentially other investors. We are not -- our financing is nowhere and our (inaudible) is nowhere dependent on teams buying stock, anyone else buying stock. That's CVC stock that they're getting that they agreed to take. They must be feeling pretty good about it if they agreed to take it at $21 and trading at $30 so I'm not sure they're unhappy with that prospect today. Just to be clear, we are not in any way dependent upon selling equity to the teams. We think, and the teams accept -- desire to be equity investors and we think that's interesting. But they will be buying stock, the secondary stock of CVC, in no way primary stock and our financing is not contingent upon it. I've read five articles that suggest how it's contingent and that's not so.
So we'll issue that stock. We paid $1.1 billion -- agreed to pay $1.1 billion of cash, already paid $800 million-ish of that and we're [ready to go], we're fully financed for that incremental 300 and we will issue the stock 3.3 billion at the $21 price which will now [clear] that up to about 4 billion to CVC and its fellow shareholders at the second quarter.
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Ben Swinburne, Morgan Stanley - Analyst [23]
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Looking at the business, Greg, you mentioned the schedule, adding races and you talked about the US market potentially as an opportunity to expand into. What are the rules and relationships with the teams as they may impact your ability or willingness to expand the season, so to speak?
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Greg Maffei, Liberty Media Corporation - CEO [24]
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Yes, there's a limit on the number of races you can truly hold and actually I think the cap agreed to under the 100 year agreement is about 25 races. But there's a general also alignment of interests on increasing the number of races to a point. The [FRA] makes the money, the teams make more money, we make more money with incremental races. Obviously there's a limit on how many you can do, just geography getting cars around the world, etc. But I hope and expect that over time we will grow the number of races to a moderate degree. You mentioned the US. I think there are other venues as well. Buenos Aires, potentially other places in Asia, the US. You know, I particularly like the idea of a night race in Vegas that would be interesting to build over time and hopefully broaden the sport. I think we've done a great job as Formula 1 historically of getting venue fees up but the long-term opportunity to build sponsorship, to build viewership in places which are relatively broadcast rich like the United States is both a challenge and an opportunity.
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Ben Swinburne, Morgan Stanley - Analyst [25]
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One of the things that I thought was interesting and maybe a little counterintuitive in your filing last week or two weeks ago was a race in Mexico you described (inaudible) a lot more valuable than a race in Germany. Maybe you can just talk about the sort of broad [bell] or range of monetization when you look at different races and what works well in one market and (inaudible) in others. Why is one more valuable than the other?
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Greg Maffei, Liberty Media Corporation - CEO [26]
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Well, I think it's mostly we have part of the sport is and will remain in Western Europe -- Monza, Monaco, Nuremberg, the tracks Germany, here in the UK. Valencia. Those have all been core races and they're not likely to change. Then you have the beneficiaries -- or we are the beneficiaries rather of that historical. The branding from Monaco with us and them very valuable and they probably have a far more [favorable right] than a new entrant like Azerbaijan, what they would pay to get a race. New entrants tend to pay more but if you look, the appeal has been enormous in the markets. Mexico City you mentioned was a great race. Austin was a great race this year -- Austin, Texas. It's only a few years old -- have both been very well attended and a lot of demand. Latin America is a place there where there was just enormous demand. Obviously Mexico is not Latin America but has the Latin American culture is enormously (inaudible) historical appeal, Latin Brazil, Senna and the like. But I think Argentina is an interesting place for the long term as well.
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Ben Swinburne, Morgan Stanley - Analyst [27]
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On the television side, any sense you can give as for the timeline to go and take maybe markets that are largely on free-to-air to pay or how long the typical TV deals are for Formula 1 as we think about revenue growth?
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Greg Maffei, Liberty Media Corporation - CEO [28]
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Mostly it's deals of three to five years and they roll over on a regular basis. There's not any cliff. So I think it's more of a process. There is not a big cliff up or down.
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Ben Swinburne, Morgan Stanley - Analyst [29]
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Lastly, just on -- move past taxes when talking to Liberty about any assets. This is the very tax-efficient business. There are some changes being deliberated in the UK around tax structure. Can you just talk about the impact that may have on the free cash flow conversion from EBITDA for Formula 1 going forward, particularly on interest deductibility?
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Greg Maffei, Liberty Media Corporation - CEO [30]
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Formula 1 actually is parent to a company called Delta Topco, which was set up by CVC Delta Topco, a Jersey company. For those of us in the United States have to understand that's not New Jersey. It's a structure that is very efficient. We have assumed for our forecast it's likely to remain efficient. Not quite as efficient as it is today but the tax rate has been very low and the structure, I think, is relatively secure. We're comfortable with it. So I don't think that's going to change in any dramatic fashion. We'll remain a very high free cash flow generator (inaudible) the free cash flow is a very effective transition as I said with low taxes and low CapEx.
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Ben Swinburne, Morgan Stanley - Analyst [31]
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Then on the team structure --
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Greg Maffei, Liberty Media Corporation - CEO [32]
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Sorry, I'm thinking -- I had one more thought about US. We have [full basis in the act of] full ability to bring that dividend so we're very comfortable for our situation. The tax rate in the UK or rather in Jersey is quite good and then [where we have been putting basis in] I think we are very comfortable in our ability to bring back capital.
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Ben Swinburne, Morgan Stanley - Analyst [33]
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To buy back stock and whatever else (multiple speakers)?
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Greg Maffei, Liberty Media Corporation - CEO [34]
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Exactly.
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Ben Swinburne, Morgan Stanley - Analyst [35]
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I just wanted to ask you about the team relationship because that's the biggest cost item for the business. You mentioned it's essentially tied to revenue. But you've also mentioned and Chase talked about this last week, about trying to prove the competitive balance. What are the things you and Chase would like to do to the agreements with the teams to make the sport more successful and do you think there are impediments or maybe interests among some of the more successful teams in keeping the status quo (inaudible)?
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Greg Maffei, Liberty Media Corporation - CEO [36]
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So it's the relationship with the teams is governed by an agreement called the Concorde Agreement that runs to 2020 so the status quo is likely to remain there without any changes. I think there's been general agreement that making the races more competitive, more ability to see changes mid-race and to have a balance is attractive, even among the teams that are winning. Chase and others have conducted mostly (inaudible) where Mercedes, Ferrari, the leading teams in terms of their revenue streams, Red Bull and all -- I think (inaudible). There are changes that can be done and will be done over time and obviously you're going to see consensus. Teams have an enormous incentive to do the long-term work and remember, the teams (inaudible) portion of our revenue through the prize money and the link and the revenue stream with us. But if you're a leading team like Mercedes or Ferrari or Red Bull, an enormous amount of the value is really sponsorship that you get either indirectly or directly. If you're Red Bull you try to build a great sport because you're trying to promote Red Bull. If you're Ferrari, you have an enormous amount of sponsorship revenue that goes directly to you that's going to be much more impacted positively by great races. So thinking about balancing team payments so they are a little more balanced and creates more fairness, has to be weighed in Ferrari's mind, I would expect, by the fact that creating a great platform helps our sponsorship revenue too, so there's a give-and-take there.
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Ben Swinburne, Morgan Stanley - Analyst [37]
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Great. We'll come back and I'll open it up for questions with the audience and if you have any Formula 1 ones, fire away. Let's move out of the tracking stock world to one of your (inaudible) companies, Liberty Broadband. The cable business that you were quite bullish on Charter and I, probably like you, was surprised by the election last week. What do you think the implications of last week's surprise are for the regulatory backdrop for cable or how does it impact your view of your Charter investment?
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Greg Maffei, Liberty Media Corporation - CEO [38]
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Well, I think as you know, a surprise but it's a positive one. It's hard to see how the regulatory environment will get worse under President-elect Trump than it was under the Obama administration and the FTC to date. We were constricted around net neutrality. We were constricted around (inaudible) pricing. It's hard to imagine that those are going to be quite as onerous in a go-forward world. So I think there is upside and it's interesting the stock trade of Charter and Liberty Broadband is basically a pure proxy for Charter. There is a very small active trader business in there, which represents 1% of the value or something. Liberty Broadband traded up nicely within Liberty and Charter traded up nicely on the expectation of a Trump presidency because if you look, the tech companies have had an enormous influence on the FTC and our forcing what they perceived were positive changes but in the main were not positive for cable as well. So think there's likely to be a swing back the other way and that's probably a positive on the regulatory front.
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Ben Swinburne, Morgan Stanley - Analyst [39]
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How about on the M&A front? I mean, that's another area where I think we all just assumed we were done in the US. Altice was up here this morning and we talked broadly about net neutrality and consolidation.
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Greg Maffei, Liberty Media Corporation - CEO [40]
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Dexter?
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Ben Swinburne, Morgan Stanley - Analyst [41]
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Michel. I believe Dexter is here, may even be in the room. I'm not sure. But the prospect of M&A are out there, at least in theory. Are you more excited about it or should we keep our expectations [current]?
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Greg Maffei, Liberty Media Corporation - CEO [42]
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I think you have to look at the realism. We are at a 49 million homes passed, 24 million customer relationships, [18, 17, something like 17.5] video relationships. There's not that much left out there to buy. The only one of any real scale is Cox, roughly 4 million subs -- I don't want to say a small number, de minimis number but it's not massive. It's not like the Time Warner deal. Most things would suggest that Jim Kennedy and the Cox family are happy being independent today. So I don't think it's going to change the landscape dramatically in that sense, that there's enormous amounts. There's just not enough cable left to buy.
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Ben Swinburne, Morgan Stanley - Analyst [43]
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Yes, okay. Another topic that's run through today has been AT&T/Time Warner which was a surprise before the election surprise. John made some comments last week, he thought that might lead to an M&A round or M&A period of extra activity in the space. How do you see that impacting Charter, if at all? Does Charter need to own content? Does it make it more important be positioned that way? That may be impacted by the election as well.
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Greg Maffei, Liberty Media Corporation - CEO [44]
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Right. Pure speculation, I assume the Amortization AT&T Time Warner deal gets done. I think President-elect Trump has shown he is a great negotiator, likes to make statements about it but I think over time he can point to a series of restrictions around protecting exclusives or zero ratings and point to (technical difficulty) end of the day. I am less fearful in some ways than John is or more -- I don't suspect it's going to lead to as much of a round of M&A as John does. I'm on the margin. He's probably more bullish on that, that that will occur. I think most of the things that could happen now for us are positive (technical difficulty).
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